Sirius Chief Talks of Ways To Get XM Deal Approved

By STEPHEN LABATON

Published: March 1, 2007

Facing skeptical lawmakers, Mel Karmazin, the architect of a proposed merger of the nation's two satellite radio companies, announced at a hearing in Congress on Wednesday that the companies would agree to government-imposed price controls and other unspecified measures to gain regulatory approval for the deal.

Appearing before an antitrust task force of the House Judiciary Committee, Mr. Karmazin, the chief executive of Sirius Satellite Radio, repeatedly and angrily contested charges by opponents, including the major trade group for broadcasters, that merging his company with XM Satellite Radio Holdings would simply transform a duopoly into a monopoly.

''There is no monopoly or duopoly,'' he said. ''That's the most bizarre thing I have ever heard.''

He maintained that the relevant market for the services offered by the two satellite radio companies includes all terrestrial broadcasters, Internet radio and other popular listening devices, including iPods and other portable music players.

With so much competition from other sources, he said, satellite radio lacks the sway of a dominant industry power.

But as he tried to sell the proposed deal to Washington, he also acknowledged the major challenges he faced in persuading policy makers that it would not be anticompetitive. He made it clear that he was willing to embark on the same kind of deal- making with the regulators that has been a hallmark of his career as a broadcast executive.

''We're prepared to make concessions, and we're willing to work with the F.C.C. on doing it,'' he said, speaking about the discussions the two companies will have with regulators at the Justice Department's antitrust division and the Federal Communications Commission.

When a Republican lawmaker, Representative Ric Keller of Florida, pressed Mr. Karmazin over whether the company would agree to price controls, Mr. Karmazin said yes, adding, ''We believe we need to show you this is in the public interest and price is important.''

''We should be held accountable for everything we say,'' he told another Republican lawmaker, Representative J. Randy Forbes of Virginia, in response to a question about how to enforce the commitments Mr. Karmazin was making for more programming and better services at lower prices.

''I'll leave it to the regulators,'' he added. ''This isn't about 'Trust me.' We should be able to be accountable.''

But toward the end of the hearing, when a Democratic lawmaker, Representative Sheila Jackson-Lee of Texas, complained that there was too much concentration in the broadcasting industry and a lack of adequate diversity in both programming and ownership, Mr. Karmazin appeared to hedge about making any further commitments.

''I don't want to make promises to suggest I'll do anything to get the merger done,'' he said. ''You can be damned if you do, and damned if you don't.''

The specific commitments that Mr. Karmazin sought to make did not assuage some of the proposed merger's more vociferous critics.

Representative F. James Sensenbrenner Jr., the Wisconsin Republican who until this year had headed the Judiciary Committee, said Mr. Karmazin's proposal reminded him of ''an old regulated gas company'' or some other highly regulated utility with rates set by the government.

The generally hostile reception to Mr. Karmazin reflected the fact that the political forces all seem to be leaning in one direction regarding the proposed merger. A powerful alliance of broadcasters and consumer groups has challenged the deal as a violation of antitrust laws and contrary to the ''public interest'' standards applied by regulators when they consider whether to approve radio mergers.

The National Association of Broadcasters, with powerful members in every Congressional district, has waged a political and public relations campaign attacking the deal.

By contrast, the two satellite networks have no significant industry allies on their side. They were warmly embraced at the hearing by only one Democratic lawmaker, Representative Anthony Weiner of New York.

Sirius and XM point to the opposition from broadcasters as proof that the deal would make satellite radio still more competitive with the rest of the radio industry.

The unanswered question after the hearing is what resonance the Congressional reaction would have with lawyers at the Justice Department and policy makers at the F.C.C.

Government officials are not expected to reach their conclusions about the deal for many months, although Kevin J. Martin, the chairman of the Federal Communications Commission, has expressed skepticism. A commission rule forbidding the merger of the satellite companies would have to be waived for the deal to be completed.

At the Justice Department, XM and Sirius have more reason to be optimistic, in large part because the Bush administration has been more permissive on antitrust issues than any administration in modern times.

The consumer groups and broadcasters -- political opponents on other issues -- have struck a fragile alliance as they have gone about challenging the satellite radio deal.

On Wednesday, one consumer group, Public Knowledge, called for the regulators to heavily condition the deal with price controls and free airwaves for alternative voices before approving it.

The group also said that broadcasters opposing the deal on antitrust grounds were hypocritical because they were simultaneously trying to ease rules that have prevented more consolidation in their industry.

Photo: Mel Karmazin, the chief executive of Sirius Satellite Radio, appeared before an antitrust task force of the House Judiciary Committee yesterday to win backing for the merger of his company with XM Satellite Radio. (Photo by Stephen Crowley/The New York Times)